The monetary policy transmission mechanism describes:
A) how a regulatory policy change might be transmitted into the economy affecting market structure.
B) how an export policy change might be transmitted into the economy affecting spending multipliers.
C) how a monetary policy change might be transmitted into the economy affecting prices, output and employment.
D) how a competition policy change might be transmitted into the economy affecting prices, output and employment.

Question

Quizplus · Accepted Answer

The monetary policy transmission mechanism refers to how changes in monetary policy, such as changes in interest rates or money supply, affect prices, output, and employment in the economy. It involves a chain of events that are set in motion by the central bank's monetary policy decisions and how they are transmitted through financial markets and institutions, ultimately affecting spending decisions and economic activity. A, B, and D are incorrect as they refer to different policy areas that do not involve monetary policy.

The Monetary Policy Transmission Mechanism Describes